Job losses are set to be announced by a leading building products firm in
response to the "dreadful" UK construction market.

Britain's construction sector is faring even worse than feared, was the message from industry as two more firms reacted to the dire market with action threatening hundreds of jobs.

Building products supplier Hanson said it is planning to cut its capacity by 10pc as sales prove worse than anticipated. The move emerged as rival building material group Burdens embarked on a strategic review of its business in response to the poor market. Bristol-based Burdens, owned by a charitable trust and its employees, said it was looking at selling part of the company and that a bidding process was under way.

Hanson, part of German group Heidelberg, has not quantified how many jobs its downsizing threatens among its 4,100 workforce. It is currently reviewing how it will carry out the changes, but job losses are expected.

The company said that the pull-back has been triggered by the “dreadful” wider market rather than any company-specific issues, as it has maintained its traditional market share and position.

Hanson, which operates across England and Wales, said it had braced for volumes in its products, which include asphalt, concrete and cement, to drop by 5pc to 6pc this year. However, the fall has proved to be double that.

“We are a completely demand-based business, we have to match our capacity to the prevailing market,” a spokesman said. “We are a wonderful barometer for the economy normally - and it’s set to stormy as far as we are concerned.”

Hanson has already roughly halved its workforce from 8,700 people in 2007, as the country headed into its construction downturn. How it will cut capacity further should be made known by the end of the month.

The developments undermine hopes that the sector can aid the UK’s climb out of recession. Allan Black, national officer at the GMB union, said: “If we are still losing capacity in these most basic industries, then there is no sign of a construction-led economic recovery.”

Carillion, the FTSE-250 support services and construction group, reiterated in a trading update on Thursday that its 2012 revenues will be lower as it reduces its building activity to match “the shrinking UK market”. Group revenue will be £3.9bn this year, down from £4.2bn, analysts at Liberum Capital predict.

Businesses operating in the construction sector are reporting that supply chains are under major pressure.

Observers say bigger contractors have kept afloat by snapping up jobs which would normally be the terrain of their smaller rivals, damaging margins.